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The Organization of Petroleum Exporting Countries is set to break a record this year: Thanks to sustained $110-a-barrel oil prices, the cartel is projected to rake in over $1 trillion in revenues this year. But while OPEC nations and oil companies profit, economists are worried that if the high prices stick around long enough it could cause the slowly recovering global economy to collapse. Here's the Telegraph:
Forecasts from the US government show that the Organisation of Petroleum Exporting Countries (Opec), whose key members include Saudi Arabia and Iran, will collect a third more in revenues because prices have averaged $111 per barrel this year.Indeed we are! If not now, then soon, when rising prices start hitting especially vulnerable and oil-dependent economies. But unless we start taking major steps to quell oil dependence in general, there's little we can do about it.
But Fatih Birol, chief economist of the International Energy Agency, said that the current price of $120 per barrel could be the catalyst for a global economic crisis on the scale of the one experienced in 2008. "If you don't see any softening of the prices, there is a risk of derailing the economy, of a double-dip," Dr Birol told the Reuters Global Energy and Climate Change Summit. "We all know what happened in 2008. Are we going to see the same movie?"
Certainly, the drive to expand offshore drilling here in the states won't lower prices. And oil companies are loving the sky-high prices. And Obama's gambit to get OPEC to lower prices by trading them higher-quality crude for more of the lower-quality stuff didn't work out. But it wouldn't have mattered in the long run anyway. No, thanks to booming demand globally, we'll be stuck with more and more expensive oil.
That is, until we start seriously transitioning away from oil dependence and towards cleaner fuels and technologies on a significant scale. Sure, higher oil prices will start making consumers think twice about buying gas guzzlers, and mass transit ridership is up -- but we need a bigger, more streamlined push to ready our societies for a future with much less oil.